Eli5: How is the national debt actually calculated?
In: Economics
Simple answer: The government holds weekly treasure auctions. Treasuries are debt contracts specifying how and when the government will pay back the loan. So very simply: the government keeps a record of all the treasuries it sells as well as those that mature (those that come due) or that it buys back.
Some additional information: Some treasuries are “[registered securities](https://www.investopedia.com/terms/r/registeredsecurity.asp),” meaning the government keeps a record of who owns what so that it knows who to send interest abd principle (AKA face amount) payments to. However most securities are now “book entry,” meaning intermediaries keep these records. In short, the government knows which brokers and dealers either own or have sold the treasuries, but it doesn’t know who they sold them to. Instead, the US Government sends payments to the brokers and dealers and in turn the brokers and dealers credit the accounts of their customers.
Additional complications: There are different ways of calculating the debt. The definition above would give you the outstanding debt, but many people think we should be tracking additional liabilities, such as the amount of money that government is expected to pay pensioners via Social Security and Medicare, as well as various entitlement programs. This is sometimes called “total debt” or something similar. These calculations require some estimating (demographics, life expectancy, etc.,) not that they are less useful when considering the full extent of our government’s liabilities.
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